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Origin warns of higher power prices

Origin Energy chairman Kevin McCann says households will be worse off if state governments continue to regulate electricity prices.

A deregulated market, such as the model that operates in Victoria, provided the best outcome for consumers, Mr McCann told shareholders at Origin's annual general meeting in Sydney on Monday.

Origin is Australia's largest electricity retailer.

"In Queensland, New South Wales and South Australia, state governments are still regulating electricity prices, long after price controls were removed from other household staples such as milk and petrol," Mr McCann said.

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"Actions by state governments that seek to cap or hold retail prices artificially low will have unintended impacts, including stifling future investment in generation and significantly lessening competition for consumers.

"We look to governments to support and promote competition and innovation."

Mr McCann said Victoria's deregulated market was the most competitive in the world, as measured by the number of people who switch between retailers.

"It has delivered more choice and innovative products and services to consumers," Mr McCann said.

Consumers around the country have faced higher electricity prices in recent years, which Mr McCann said was due to investment in the networks by state-owned distribution companies, the introduction of the carbon price and federal and state green schemes.

"As shareholders, you will understand that Origin needs to pass these costs on to customers," Mr McCann said.

"Our challenge is to manage the impact of rising energy costs on customers, while ensuring we continue to provide appropriate returns for shareholders."

Last week, Origin shares fell to their lowest level since early 2008 after the company said regulatory and pricing decisions would wipe between five and 10 per cent from its underlying profit this financial year.

Origin shares were down a further eight cents, or 0.8 per cent, at $10.34 at 1104 AEDT.